Supply of services vs. delivery of goods Current treatment: Supply of services Split of capital from interest VAT applies to capital element at the VAT rate for goods VAT does not apply to the finance element VAT is deductible Account for VAT at time of instalments EU Accession Supply of services – main rule May be deemed as delivery of goods Case by case analysis of the leasing contract VAT Standard rated Treatment unclear and varies between countries

Cross border leasing Current treatment Cross-border leasing + option to buy => importation by the beneficiary EU Accession Cross-border leasing + option to buy => 1)within the Community Intra-Community acquisition by the leasing company Obligation to register for VAT purposes 2) with parties outside the Community Importation

Place of supply Current treatment Leasing of: movable tangible property – where the beneficiary is located immovable property – where the property is located EU Accession New rules: movable tangible property except means of transport – where the beneficiary is located means of transport – where the supplier is located immovable property – where the property is located Use & enjoyment for leasing transactions with non-EU parties

Compliance Current treatment VAT return VAT purchase ledger VAT sales ledger EU treatment Register of non-transfers Recapitulative statement for intra –Community deliveries and acquisitions A list of capital goods subject to adjustment (e.g. fixed assets)

LOCAL LEASING – MOVABLE GOODS 2 operations: Leasing – service: VAT on each installment Financial VAT both on principal and interest; Operational VAT on lease installment; Local supply of goods at the end of the leasing contract (if option exercised) VAT on residual value. LOCALSUPPLIER L – LOCAL LEASING COMPANY COMPANY ROMANIANCLIENT service supply of goods ROMANIA NEW

3 operations: Intracommunity acquisition (ICA) in RO / VAT R/C; Leasing - service: VAT on each installment Local supply at the end of the contract (if option exercised) VAT on residual value. NEW supply of goods RO EUSUPPLIER L – LEASING COMPANY COMPANY CLIENT service HU LOCAL LEASING – MOVABLE GOODS ICD ICA

3 operations: Import by L Import duties (import VAT, customs duties) at the moment of import Leasing service: VAT on each installment Local supply at the end of the contract (if option exercised) VAT on residual value. RO FOREIGNSUPPLIERS (outside EU) L – LEASING COMPANY COMPANY CLIENT service supply of goods TR LOCAL LEASING – MOVABLE GOODS exportimport

CROSS BORDER LEASING – MEANS OF TRANSPORT 3 operations: Leasing - service (except MS where leasing = supply of goods!) always VAT of country of origin (HU) VAT registered person refund on 8 th Directive, subject to limitation in the Client country of origin Non-registered person no refund If option exercised: Intracommunity acquisition (ICA) in RO by L / VAT R/C L registration in RO (L’) Local supply (no transport) ROMANIANCLIENT L – LEASING COMPANY COMPANY RO EU SUPPLIER service supply of goods HU L’ NEW

3 operations: Leasing - service (except for MS where leasing = supply of goods!); VAT in RO if Romanian client is a taxable person R/C if Romanian client is a VAT registered person If option exercised: Intracommunity acquisition (ICA) in RO by L / VAT R/C - L registration in RO Local supply (no transport) L – LEASING COMPANY COMPANY service MOVABLE GOODS (except for means of transport) of transport) ROMANIANCLIENT supply of goods ROHU L’ NEW CROSS BORDER LEASING – MOVABLE GOODS EXCEPT MEANS OF TRANSPORT

3 operations: Import performed by L L registration in RO by FR Leasing service Always VAT in RO Local supply of goods (no transport) L – LEASING COMPANY COMPANY RO MEANS OF TRANSPORT ROMANIANCLIENT service supply of goods TR L’ NEW CROSS BORDER LEASING – MEANS OF TRANSPORT

3 operations: Import performed by L L registration in RO by FR Leasing service VAT in RO if Romanian client is a taxable person R/C if Romanian client is a VAT registered person Local supply of goods (no transport) service L – LEASING COMPANY COMPANY MOVABLE GOODS (except for means of transport) of transport) ROMANIANCLIENT supply of goods ROTR L’ NEW CROSS BORDER LEASING – MOVABLE GOODS EXCEPT MEANS OF TRANSPORT